Monday, May 21, 2012

Now: Debt unsustainability in Japan and Europe. Next … ?

Kyle Bass made headlines last year when he talked about making money out of financial crises—especially in Japan and Europe. (As if making money for your clients when there’s blood in the street is a bad thing.). Things haven’t quite hit the skids yet, but he’s positioned when they do.

Japan is the next in line to face a sovereign debt crisis, says Bass, and very soon the markets’ focus will turn on it. He expects monetary deflation that will lead to a correction in equity prices because such economic shock will spread to the world economy .. leading to a stock market correction of 40-50%…. He mentions that Japan is next after Europe … and it depends on Japan and Europe, how long time USA has until a debt crisis. In his opinion it is 3-5 years away.

Here are his thoughts (from late last year) on the reason for the crisis: the total unsustainability of government debt in Europe and Japan. Japan, he argues, “is the most complex spring-loaded situation in history.”

This is like any budget and any entity. If you buy too much and refuse to stop in time, at some point the idea of repayment becomes too distant. You just want to be able to just meet the debt service payments. May entities bring in it consulting to assist with getting out of these predicaments. The problem is that you have to stop spending.

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Comments on this post

Now: Debt unsustainability in Japan and Europe. Next … ? the reason for the crisis

welfare.

Europe and Japan have been out-competed by China - which doesn't have welfare, and where people are happy to work, not bludge.

It really is that simple.

And the only reason people haven't noticed NZ yet is that our economy is only half the size of Greece, and we're in the middle of nowhere.
This is like any budget and any entity. If you buy too much and refuse to stop in time, at some point the idea of repayment becomes too distant. You just want to be able to just meet the debt service payments. May entities bring in it consulting to assist with getting out of these predicaments. The problem is that you have to stop spending.